LME Week Preview: Copper market faces tight supply, record prices, and M&A momentum

With LME Week fast approaching, the copper market is abuzz with talk of supply disruptions, high prices, tariffs, and mergers. In this article, the Benchmark copper team dissects some of the major talking points that are likely to dominate conversations among metals market participants over the coming week.

Major supply disruptions to plunge refined copper market into deficit

The past few months have seen a series of disruptions at major copper mines across the world. Grasberg, Kamoa Kakula, and El Teniente – three of the ten largest copper mines globally – have each faced significant issues that have altered the supply outlook for 2025 and 2026.

A major incident at Freeport McMoRan’s Grasberg mine in Indonesia has been the most notable disruption, with the mine expected to lose close to 600kt of output between now and the end of next year. This production loss is greater than the annual output of many of the world’s largest mines.

Grasberg is not the only major mine facing issues. Disruptions at the Kamoa Kakula mine in the Democratic Republic of the Congo (DRC) are expected to remove a further ~300kt of copper supply across 2025–26. Together, the losses from these two operations are set to be a major topic of discussion during LME Week.

These losses have been compounded by issues at Codelco’s El Teniente in Chile, resulting in Codelco posting the worst monthly production for 20 years in August. Less notable disruptions, such as Teck’s downgrading of QB2’s guidance, have added to broader supply concerns.

Sky high copper prices

Owing largely to the aforementioned disruptions, LME copper prices have reached multi-year highs in recent days – hitting $11,000/t on 8 October for only the third time in the exchange’s history.

Benchmark expects a substantial deficit in the copper market in both 2025 and 2026 – a widely held view that helps explain recent price strength. CME copper prices have reacted even more strongly than LME prices, with the arbitrage between the two exchanges reaching almost $600/t this week – the highest spread since before the US confirmed that copper cathodes would not be subject to tariffs.

Market participants told Benchmark that the widening spread may reflect buying from US-based financial investors, such as funds, reacting to news of tightening supply.

While supply-side constraints are seen as the key driver, attention is also turning to the potential impact of tariffs and wider macro-economic uncertainty on demand in the months ahead.

Treatment charges at unprecedented lows

No copper market conference in recent years would have been complete without a debate on treatment charges (TCs). Copper TCs have remained at record lows throughout 2025, with spot benchmarks sinking further into uncharted territory.

Spot smelter TCs have been in the negative territory for months; a level that wouldn’t have been believed just a few months ago. For context benchmark treatment charges for 2024 were positive $80/t.

Low TCs have put pressure on smelter business models. Many non-Chinese smelters remain somewhat insulated by long-term contracts, typically agreed in the positive $20s/t range for 2025. Meanwhile, some Chinese smelters have achieved record profits this year, supported by-product earnings from gold, sulphuric acid, and free copper units.

Annual contract levels begin to take shape during LME week. Many concentrate market participants will focus on where the 2026 benchmark will settle and what this will mean for smelter margins. Several market participants, including Benchmark, expect annual TCs to average ~$0/t.

Fortunately for the already tight concentrate market, disruptions at Grasberg and Kamoa Kakula primarily affect refined output rather than concentrate supply, given both mines have integrated smelting operations.

Aurubis raises copper premiums in Europe

European participants will also digest the impact of Aurubis’s 2026 cathode premium announcement this week. The company set its European offer at $315/t – up 40% year-on-year, the highest in its history

Market observers believe the increase reflects the need to offset weak TCs, persistent supply disruptions at Grasberg, and the wide arbitrage between the US and European exchanges.

Anglo-Teck merger

M&A discussions are once again front and centre in the copper market. This year, attention is focused on the proposed merger between Anglo American and Teck. If completed, the combined entity – known as “AngloTeck” – would rank as the fifth-largest copper producer globally

Benchmark data shows that AngloTeck’s combined production could total 875kt in 2025 (484kt from Anglo American and 391kt from Teck) placing it behind Codelco, BHP, Freeport McMoRan, and Grupo Mexico.

Key copper assets would include 44% of Collahuasi and 60% of Quebrada Blanca in Chile, along with 60% of Quellaveco in Peru. Based on company guidance, more than 70% of the portfolio’s value would be copper-weighted following the merger.

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